The monthly reporting form used to be our most popular Builders Risk form for builders with 6 or more starts.
The builder completes a reporting form on a monthly basis and reports the prior month’s new starts including their estimated completed values. Once reported, a start is covered for one year.
The builder also re reports any starts that are greater than one year old and still not sold. These old starts must be renewed for an additional annual term.
The builder computes the premium that’s due by multiplying the rate that’s listed on the form times the estimated total completed values for all new starts and re reports. The builder then mails the completed monthly form and check back to the insurance company.
The first advantage is that the rates are slightly lower than the single shot and the second advantage is that self reporting reduces that administrative hassle of playing communication tag with your agent on every start.
The disadvantages are that our builder clients sometimes forget to send in their monthly report or they forget to re report the starts on the unsold dwellings that are over one year old. Failure of the insurance carrier to receive the form or failure to re report an unsold dwelling can result in no coverage on a start.
We’ve had several instances where our clients have had a claim denied for one of these reasons. This is the reason why we now recommend that most of our client use the annual audit form instead of the monthly reporting form.
If you’re going to use a monthly reporting form, make sure that you have a foolproof suspense system and don’t rely solely on your monthly reminder letter from the carrier to send in your monthly report.